I think your correct there. I suspected the switch crews that switched the Ford Plant at River Rouge were reporting to Ford Motor Corp. Long time ago they used to be Ford Logo Industrial Switchers there. River Rouge if you never have been there is a combo, Auto assembly plant, Ore to Steel Furnace / Plant, Great Lakes to Ore unloading dock, etc. Huge monolith of a complex that consumes several square miles of land. CSX and Conrail both served the plant and had a small fleet of switchers stationed there to service the yards, auto plant, blast furnace, etc. River Rouge just builds the Ford Mustang now I think.
Where are the specifics to support your argument? The public financials show CSX is a company that has been moving forward for more than five years. Anyone can check them out.
Without venture capitalists we probably would not have Apple, Dell, Microsoft, Oracle, etc., as well as many of the innovative medical technologies that have served most of us well.
To be sure, there are unethical venture capitalists, but most of them are doing what most us do. Optimizing their returns by offering a service that in the long run hopefully benefits society.
I live in an active adult community. Some of my neighbor’s rant about greedy capitalists and business people. But suggest a reasonable chang
Venture Capitalists and Vulture Capitalists have different views and manufacture different outcomes.
It’s not the venture capitalists that are the problem. It’s the vulture capitalists - those folks who don’t care about the long run - just what they can extract in the short term.
What is a vulture capitalist? How about some railroad examples with specifics.
Children’s Fund, Mantle Ridge.
https://www.railwayage.com/news/hedge-funds-and-good-railroading-dont-compute/
I’m sure it will be hard to discern from CSX’s financials, but one has to wonder how much of the “savings” that EHH’s actions created went back into improving the railroad, and how much simply found its way into investor’s pockets.
I know, that’s what’s supposed to happen - money goes into investor’s pockets. The question is how long that type of cash flow can be maintained, ie, how many assets can be sold off before the railroad is unable to function and thus ceases to pay the investors.
The article is one person’s opinion, i.e. whether hedge fund investors harmed CSX. Many of the statistics seem to reflect trends that would have happened irrespective of who had control of CSX. Coal traffic, as an example, is declining, and there is little anyone can do about it.
People invest in hedge funds because they expect to have a return. Just like all of us.
Without access to CSX’s books, it is not clear whether EHH’s action were or will prove to be correct. But the company’s cash flow statements for the past five years don’t indicate that anyone was raping CSX.
From 2013 through 2017 the company invested $11.8 billion in property, plant, and equipment. In addition, through the first three quarters of 2018 it invested another $2.4 billion in its PP&E.
Corporate raiders tend to run off long term managements for their own form of incompetent short term syphoning of corporate revenues as ‘shareholder value’. Mantle Ridge and EHH are such a incompetent short term raider. Mantle Ridge doesn’t want to RUN a railroad, it wants to get the cash and move on the next victim.
If CSX was doing so well, wouldn’t your traditional, long-term investor be delighted - slow and steady means my retirement account will be nice and strong when I quit working.
Why would a long-term investor be interested in the short-term gains the vulture investor/corporate raider wants? Sure, the stock is high right now, but what happens when all those cuts come home to roost?
Quoting PJS 1 "A better term for vulture capitalist would be corporate raider. One of the best know in Texas is T. Bone Pickens. His argument for what he does or did is straight forward. Corporate raiders tend to run off incompetent managements! I don’t like them. But he has a point worthy of consideration. "
You did mean T. Boone Pickens, did you not?
He had a bone to pick with him! [-)][-)][-)][-)][*-)]
Correct! Hopefully a misspelling error did not deter your understanding of the point!
I think Carl Icahn is also a good example.
https://www.investopedia.com/articles/managing-wealth/080516/how-did-carl-icahn-get-rich.asp
Jeff
With the possible exception of American Railcar, there is nothing in the article to indicate that Icahn or any corporate raider has had a deleterious impact on a railroad.
To truly know the impact of corporate raiders on American businesses, one would need to take a statistical sample from every company impacted by a corporate raider and do a deep dive into their financials to understand the true impact of corporate raiders.
I don’t know of anyone that has argued corporate raiders are nice people. But a case can be made for them. Usually they are only successful because management is not performing effectively.
American capitalism is not a nice system. But it is reasonably effective in creating wealth for a large number of people in an open and free market-based society. Which I support 120 percent!
As the article points out, some if not most of the shareholders in the company’s Icahn influenced or controlled benefited from his intervention. But some did not. Exceptions can be found in any activity.
Carl Icahn certainly didn’t do TWA any favors when he got stuck owning the airline after the board of directors wouldn’t cave in to his greenmail demands.
The issue is that a lot of hedge funds are short-term to very short-term speculators who are demanding a quick appreciation in the stock price, even if the underlying firm is gutted in the process.
If someone shoplifts food for their family and gets caught, they might spend years in prison. But if someone ‘steals’ millions from a company or pension fund, they are considered capitalist successes. What’s wrong with that picture?
Bingo!
The thing that’s wrong is your interpretation of the picture. I’ll ask my standard question: “Did you ever take and pass a college level economics course?”
A good example of what Zardoz is talking about is the ongoing Sears Canada pension fund lawsuits in the aftermath of the company’s bankruptcy and liquidation.
Prior to going under Eddie Lampert and other executives received large bonus payments, and now the retirees are seeing their pensions cut.
And no, I never took economics or college courses of any kind (straight from high school to the railroad). But one does not need to attend college to learn ethics and morals.
Just because something makes business sense and is legal does not mean that it is ethical or the right thing to do. People see that, management does not.
One can wonder the basis for awarding the bonuses–running the compnay into bankruptcy?